Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

<ul>
<li>Results for FY2022-23 provide a snapshot of winners and losers in Japan's retail sector.</li>
<li>The data shows a big improvement in performance for retailers with sales of ¥250 billion or more and the outlook is positive for most, particularly for profits.</li>
<li>This also means that market concentration is intensifying, particularly in sectors like drugstores but also now in supermarkets. We highlight the winners in each sector.</li>
</ul>


Results for FY2022-23 provide a snapshot of winners and losers in Japan's retail sector.
The data shows a big improvement in performance for retailers with sales of ¥250 billion or more and the outlook is positive for most, particularly for profits.
This also means that market concentration is intensifying, particularly in sectors like drugstores but also now in supermarkets. We highlight the winners in each sector.


Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Today, post-close of its first day of trading as MergeCo, <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> announced 12 different investors who had voted against the deal <a href="https://contents.xj-storage.jp/xcontents/AS70521/6d292fee/db4e/4ae0/8c87/a9cfe14bbd50/140120251201512689.pdf" target="_blank" rel="noopener">filed for dissenting shareholder share repurchase</a>.</li>
<li>This covers 27.154mm shares - a bit more than what Orbis owned when they last filed (25.5mm shs) and is just over half the AGM dissension.</li>
<li>This creates some weirdness. A 5+% buyback is strong accretion, but "fair price" is a question, and it could mean smaller tender offer quantity and larger eventual index selldowns.</li>
</ul>


Today, post-close of its first day of trading as MergeCo, Tsuruha Holdings (3391 JP) announced 12 different investors who had voted against the deal filed for dissenting shareholder share repurchase.
This covers 27.154mm shares - a bit more than what Orbis owned when they last filed (25.5mm shs) and is just over half the AGM dissension.
This creates some weirdness. A 5+% buyback is strong accretion, but "fair price" is a question, and it could mean smaller tender offer quantity and larger eventual index selldowns.


[Japan M&A] Possible Partial TSURUHA (3391 JP) Tender Changes - More Accretion! Smaller Tender?

<ul>
<li>The merger between <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> and <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia Holdings (3141 JP)</a> will go through in about 6 weeks. In the interim, there are interesting events. </li>
<li>After, there is a Partial Tender Offer. I expect <a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon Co Ltd (8267 JP)</a> will have to pay up. </li>
<li>Furthermore, the stock is not overly expensive vs Peers AND there are synergies to come from the merger, making it relatively cheaper. It's not squeezy, but it's skewed.</li>
</ul>


The merger between Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) will go through in about 6 weeks. In the interim, there are interesting events. 
After, there is a Partial Tender Offer. I expect Aeon Co Ltd (8267 JP) will have to pay up. 
Furthermore, the stock is not overly expensive vs Peers AND there are synergies to come from the merger, making it relatively cheaper. It's not squeezy, but it's skewed.


[Japan Activism/M&A] - Closing In On the Tsuruha Partial Tender - Likely Needs To Be Higher

Japanese Turnaround Situations, Short-Ideas, Azabu Research

Michael Allen

Japanese Turnaround Situations, Short-Ideas

Azabu Research

Azabu Research is a publishing and consulting firm focused on distressed equities in the Japanese market. We specialize in turnaround strategies, corporate combinations, divestitures, and restructuring.

Publisher of the Tokyo Turnaround Letter, which conducts the most thorough research possible of publicly available information, including forensic tests for fraudulent overstatement of assets and understatement of liabilities, as well as rigorous market and industry analysis to assess the underlying strengths of the company’s products or services, the appropriateness of the company’s turnaround strategy, and the skill of its current management team. The average length of a report exceeds 25 pages of text and tables, excluding any disclosures or executive summaries.

We have more than 30 years of experience in applying this process to distressed equities in Japan. Additionally, subscribers have free access to detailed, yet easily navigated earnings models for the target company as well as the top five comparable companies, and unlimited access to the analyst for follow-up questions.

Azabu Research also conducts be-spoke research on a project basis, and provides consulting services to companies looking to restructure, divest, make acquisitions, go public, or improve investor sentiment toward their stock.

Independent Research and Consulting Firm

<ul>
<li>Japan maybe facing an unprecedented heat wave this fall, threatening retailers' profits as high-end seasonal items may not sell </li>
<li>Six major retailers, including Fast Retailing, are at risk of serious profit declines if the weather forecasts are accurate. That's a big "IF", but wait, there's more.</li>
<li>U.S. tariffs on clothing could devastate Fast Retailing's profits there, potentially forcing them to withdraw from the U.S. market.  </li>
</ul>


Japan maybe facing an unprecedented heat wave this fall, threatening retailers' profits as high-end seasonal items may not sell 
Six major retailers, including Fast Retailing, are at risk of serious profit declines if the weather forecasts are accurate. That's a big "IF", but wait, there's more.
U.S. tariffs on clothing could devastate Fast Retailing's profits there, potentially forcing them to withdraw from the U.S. market.  


Japanese Retailer Red Alert Is the Reddest Ever

<ul>
<li>This morning the Nikkei <a href="https://www.nikkei.com/article/DGXZQOUC234HG0T20C25A5000000/" target="_blank" rel="noopener">reported</a> shareholders of <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia Holdings (3141 JP)</a> and <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> approved their Merger. Activists opposed but it was going to be close at best.</li>
<li>As <a href="https://www.smartkarma.com/insights/japan-activism-m-a-thinking-about-positioning-around-the-tsuruha-welcia-vote" target="_blank" rel="noopener">expected</a>, Welcia shares popped, and the spread converged to 2% with Tsuruha falling back to just below ¥11,400. Some of this is unwind of speculative interest in Tsuruha.  </li>
<li>The new yuhos are out, which shows roughly where we stand (as of end-Feb, and some updates). Now the trade is NEWCO vs Aeon's interest and NEWCO vs World.</li>
</ul>


This morning the Nikkei reported shareholders of Welcia Holdings (3141 JP) and Tsuruha Holdings (3391 JP) approved their Merger. Activists opposed but it was going to be close at best.
As expected, Welcia shares popped, and the spread converged to 2% with Tsuruha falling back to just below ¥11,400. Some of this is unwind of speculative interest in Tsuruha.  
The new yuhos are out, which shows roughly where we stand (as of end-Feb, and some updates). Now the trade is NEWCO vs Aeon's interest and NEWCO vs World.


[Japan Activism/M&A] - Shareholders Approve Tsuruha/Welcia Merger - Now It's Partial Offer+Synergies

Japan

MatsukiyoCocokara & Co. operates drug store chains. The Company retails medicines, cosmetics, health foods, beauty care products, and other products. MatsukiyoCocokara & also operates supermarkets and home centers.

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MatsukiyoCocokara (3088 JP)

Japan's Best Performing Retailers

There were strong improvements in both sales and profits for leading retailers last year and the following insight looks at the main winners and...

Michael Causton

[Japan M&A] Possible Partial TSURUHA (3391 JP) Tender Changes - More Accretion! Smaller Tender?

Tsuruha announced 5+% of shares asked for appraisal rights. That means a 5+% buyback at price TBD. It might be at the Tender Price. Technicals are...

Travis Lundy

[Japan Activism/M&A] - Closing In On the Tsuruha Partial Tender - Likely Needs To Be Higher

The Tsuruha/Welcia merger is official in 6 weeks. There is index buying between now and then, then a Partial Offer, then synergies to come. It's a...

Travis Lundy

Japanese Retailer Red Alert Is the Reddest Ever

Japan's retailers face profit decline due to potential heat wave this fall; U.S. tariffs likely to do far more damage to Fast Retailing's profits...

Michael Allen

[Japan Activism/M&A] - Shareholders Approve Tsuruha/Welcia Merger - Now It's Partial Offer+Synergies

Nikkei has reported the Welcia/Tsuruha merger is approved. Neither company has confirmed yet. But this means analysts start to look at synergies,...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japan's Best Performing Retailers

There were strong improvements in both sales and profits for leading retailers last year and the following insight looks at the main winners and...

Michael Causton

[Japan M&A] Possible Partial TSURUHA (3391 JP) Tender Changes - More Accretion! Smaller Tender?

Tsuruha announced 5+% of shares asked for appraisal rights. That means a 5+% buyback at price TBD. It might be at the Tender Price. Technicals are...

Travis Lundy

[Japan Activism/M&A] - Closing In On the Tsuruha Partial Tender - Likely Needs To Be Higher

The Tsuruha/Welcia merger is official in 6 weeks. There is index buying between now and then, then a Partial Offer, then synergies to come. It's a...

Travis Lundy

Japanese Retailer Red Alert Is the Reddest Ever

​Japan's retailers face profit decline due to potential heat wave this fall; U.S. tariffs likely to do far more damage to Fast Retailing's profits...

Michael Allen

[Japan Activism/M&A] - Shareholders Approve Tsuruha/Welcia Merger - Now It's Partial Offer+Synergies

Nikkei has reported the Welcia/Tsuruha merger is approved. Neither company has confirmed yet. But this means analysts start to look at synergies,...

Travis Lundy

Japan's retailers face profit decline due to potential heat wave this fall; U.S. tariffs likely to do far more damage to Fast Retailing's profits...